The homebuying and selling season typically kicks off right now. Will the newest stage of the COVID-19 pandemic wreck the market? Here’s the scoop.
(Realtor.com / Getty Images)
By Janet Siroto
Omicron has indisputably put a damper on early 2022 and as COVID-19 infection rates continue to climb, many may wonder whether we’re headed toward another nationwide shutdown of schools, businesses, and other #lifegoals that may have just begun sputtering back to life.
Meanwhile, homebuyers who’ve vowed that this is the year they’ll finally buy a house might feel as if a wrench the size of a Mack truck was thrown into their plans. Will open houses even be allowed? Will home sellers pull their listings, thinking it’s not worth the risk?
In an effort to shed some light on the year ahead, we surveyed real estate experts on what homebuyers and sellers should expect in the coming weeks and months.
How omicron will affect the housing market
Before the omicron variant of COVID-19 appeared on the scene, the 2021 housing market was rebounding healthily from previous waves of the pandemic and turned downright bullish as the end of the year approached. In spring 2021, a Realtor.com® survey found that only 10% of homeowners planned to sell within 12 months. By fall, that number had ballooned to 26%.
These factors had portended a tidal wave of home sales in the new year. And then the new omicron strain hit in November, followed by a December dip in new listings.
Was this sudden drop due to omicron, or just the typical holiday season lull?
George Ratiu, manager of economic research at Realtor.com, isn’t sure, but feels optimistic that omicron won’t halt the housing market’s momentum, particularly since this variant appears milder than its predecessors.
“We are not through it yet, but so far, this virus seems to be a lot more contagious, but also a lot less negatively impactful in terms of sickness and death,” Ratiu says. He also points out that data from epidemics in 1918 and the 1950s have also shown that viruses become more contagious but less severe over time.
Indeed, indications from South Africa, where the COVID-19 strain was first detected, showed a steep surge in cases followed by a rapid decline. So there’s some reason to expect that this latest wave of the pandemic in the U.S. will follow suit.
Omicron doesn’t seem to have hit the economy as hard as previous waves, either.
“The GDP and economy have survived fairly well,” Ratiu explains. “We’re seeing housing weather the variant so far. Retail sales, consumer confidence, and other indicators show guarded optimism in the road ahead.”
Bottom line: Even as COVID-19 infection rates climb, most experts aren’t bracing for a shutdown like we saw during the first wave of the pandemic in spring 2020.
“I do not believe that omicron will have much impact on the selling season,” says Cara Berkeley, a personal financial expert at Penny Polly. “The delta variant did not seem to slow things down here [in Tennessee], so omicron should not either. The number of homes sold in Nashville in November of this year was higher than the number sold in November of last year. The upwards trend both in sales and in the median price per home is continuing.”
Why omicron isn’t stopping home sellers from listing today
Even in the face of high COVID-19 infection rates, many home sellers are still eager to list in the new year because, frankly, they’ve been waiting long enough.
“My husband is already retired, and we’ve been dreaming of moving to Maine for a while,” says Meg Rooney, 63, of Fairfield, CT. “But we’ve felt paralyzed by the pandemic. The time didn’t feel right in the middle of the crisis. But I think omicron will be the last surge, and our real estate agent says people are ready to tour and buy despite this current uptick in cases. So we’ll finally put our house on the market.”
Most listing agents we spoke to see no shortage of buyers in their respective markets—particularly with more people taking on remote jobs than ever before.
“There continues to be huge pent-up demand,” says Tami Bonnell, co-chair of EXIT Realty Corporate International.
The take-home lesson for sellers: Those who list should expect plenty of offers—although only time will tell whether we’ll see a repeat of the frenzied bidding wars of 2021.
Why omicron isn’t scaring off homebuyers
Meanwhile, omicron doesn’t seem to be deterring homebuyers much.
“I will be hitting the open houses hard this month,” says Alison Levine, a mom of a toddler and a 6-year-old in Cleveland. “I know how high the infection rates are. But the pandemic has also shown me that our apartment is too small for remote learning plus working from home—and I need a backyard.”
Many of today’s homebuyers, much like Levine, have put their house hunts on hold for the past two years of the pandemic. By now, they’ve had it with their cramped quarters, and are willing to take a few calculated risks to upgrade to a place that better fits their lives today.
“Younger parents may be having a first or second child and need a bigger house, or a different school district,” explains Ratiu. “I see a bright future for the suburbs in 2022.”
In addition to outgrowing their homes, homebuyers have another urgent reason to hazard some home tours right now even with omicron lurking: Mortgage interest rates are expected to rise soon.
“Buyers are acutely aware that the current mortgage rates are just above 3%,” says Ratiu. “While they have been flat, rates are expected to rise, so people are in a hurry to capitalize on this.”
Homebuyers this year should brace themselves for plenty of competition.
“There is huge demand, [but] there’s still short inventory,” says Bonnell. “I believe the first half of the year will be tighter with more bidding wars than the second half.”
One reason omicron likely won’t slow down homebuyers is that so much of home touring today is happening virtually rather than in person. In 2020 during the first wave of COVID-19, video and virtual tours were more of a novelty that certain buyers and sellers resorted to when in-person viewing wasn’t safe. By now, though, virtual tours have matured into a far more sophisticated and commonplace experience
“We’ve had a year and a half to practice virtual tours and marketing,” says Norman Miller, a real estate and finance professor at the University of San Diego. “We’ve taken some of the fear out of the process.”
To succeed in early 2022, buyers will need to bring their A-game and start preparing now. This means making sure you have a current mortgage pre-approval (they expire over time), watching interest rates closely, and getting ready to pounce once your dream house appears.
“My agent and I frequently text about what she’s seeing in the market, things like how quickly things are selling and where the winning bid is compared to the asking price,” says Levine. “That way, I know how high to bid.”
Real estate in the wake of omicron: What’s ahead?
While many experts anticipate that omicron will be more of a blip than a bomb on this year’s real estate forecast, the one real wild card is whether more variants are on the horizon.
“It’s hard to project, but on broad balance, we’re likely to see continued variants in 2022,” says Ratiu.
Yet putting our lives on hold forever just isn’t something humans are meant to do, a fact that homebuyer Levine keeps in mind as she forges ahead.
“Omicron isn’t softening things so far,” she says. “So I am getting my ducks in a row.”
Janet Siroto is a journalist, editor, and trend tracker. Her work has appeared in Cosmopolitan, Good Housekeeping, and other publications.